Tenant Fees Bill: What are the main changes?

By Jake McKey, NLA Policy Officer

After months of debate and uncertainty for landlords, the final iteration of the Tenant Fees Bill, amendments and all, has been approved. While the rental landscape will change immeasurably on 1st June, this guide will remind you of the key changes, how will they affect you as a landlord, and what you can do to prepare.

What are the key changes?

Once in force, the Bill will bring an end to upfront fees charged by landlords and agents to their tenants. It will also limit the levels of both security and holding deposits – with most security deposits capped at five weeks’ rent and holding deposits at one week’s rent.

The Act will apply in England only, however similar legislation is being introduced in Wales.

This means landlords in England will no longer be able to charge for many services provided to the tenant, including:

Referencing

Credit checks

Inventories

Assessing guarantors

Services, such as cleaning or gardening

Administration

The only charges allowed will be for replacement of a lost key or security device, and a charge when rent payments are at least 14 days late.

Landlords will also still be able to claim for damages where there is a breach of the tenancy agreement.

There will be a 12-month transition period for existing tenancies, which means that any tenancies agreed before 1st June 2019 will not be subject to the new rules until 2020.

However, all new tenancies from 1st June 2019 will need to comply with the regulations. You must make sure that any tenancy agreements are up-to-date and reflect the provisions around fees. NLA members can always access the most recent version of our Assured Shorthold Tenancy agreement via NLA Forms.

What are the penalties for breaching the ban?

For landlords who are found to be in breach of the fee ban, a fine of £5,000 will be issued for an initial breach of the ban. It will be a criminal offence if an individual has been fined or convicted of the same offence within the last 5 years.

Alternatively, financial penalties of up to £30,000 can be issued by local authorities instead of prosecution.

What else do I need to consider?

As a landlord, you should be considering the impact this Bill will be having on your costs, with research finding the Act will likely cost landlords £83 million in the first year, meaning you may need to consider increasing your rent to cover this shortfall.

Unsurprisingly, letting agents are expected to be hit even harder by the changes, with costs of up to £157 million in the first year. The Government has acknowledged that agents will make up for the differences in cost by increasing the commission charged to landlords, which will burden your portfolio with significant longer-term costs.

For further advice on how to prepare for the ban on fees, NLA members can contact our Advice Line on 020 7840 8939.

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